Greer v. Doriot

120 S.E. 291, 137 Va. 589, 1923 Va. LEXIS 182

• Court: Supreme Court of Virginia
• Decided: November 15, 1923
• Status: Published

Opinion

Sims, J.,

after making the foregoing statement, delivered the following opinion of the court.

The question presented for decision by the assignments and cross-assignment of error is as follows:

1. Did the court err in instructing the jury that if they believed from the evidence, by a preponderance thereof, that the contract set up in the notice and introduced in evidence was made and breached by the defendant as alleged in the notice, the plaintiff was “entitled to recover the stipulated price of the Ashe street property, to-wit, $3,500.00, but without interest, as it appears that the plaintiff has had the use and possession of same; and (that), in addition thereto, (the) plaintiff (could) only recover nominal damages on account of not getting a conveyance of the Oak street-property”? ■

The question must be answered in the affirmative.

As construed by both parties, by the deeds which were prepared by their direction by which the respective conveyances provided for were to have been, made, the contract required the defendant, Greer, to convey to the plaintiff, Doriot, Greer’s Oak street property with general warranty and covenants of title. Therefore the plaintiff had the right to require a marketable title to such property to be conveyed to him by the defendant. Sachs v. Owings, 121 Va. 162, 92 S. E. 997. Such, indeed, is the proper construction of the contract, independently of said mutual construction of the parties, there being no evidence that the contrary was intended by them. Ford v. Street, 129 Va. 437, 106 S. E. 379. The deed from Greer, without his wife uniting-therein, would not have conveyed a marketable title to the property, and the plaintiff, Doriot, had the right to reject such conveyance and to maintain the action against Greer for damages for breach of the contract in failing to deliver a deed to the Oak street property in which the wife of the latter joined as grantor. 27 R. C. L., sec. 236, pp. 509-510, sec. 387, p. 630.

In séction 236 of the valuable work just cited this is said:

“ * * an inchoate right of dower is, according to the better view, an incumbrance, within the meaning of a vendor’s agreement to convey a good or marketable title * * * . Therefore, where a vendor is required to convey a title free of incumbrances, a tender of his general warranty deed, in which his wife does not join so as to bar her dower, is not a performance of or an offer to perform his contract, and the purchaser may reject such a conveyance and maintain an action for damages for breach of contract.” And in section 387 of the same work, just cited, this is said: “And the fact that the inability of the vendor to convey is owing to the refusal of his wife to join in-the conveyance so as to bar her dower does not prevent the vendor from being liable in such an action.”

This brings us to the consideration of what is the measure of damages applicable in such case.

Under the English doctrine of Flureau v. Thornhill (2 W. Black 1078), which is also the Virginia doctrine on the subject, Matthews v. LaPrade, 130 Va. 408, 107 S. E. 795; Davis v. Beury, 134 Va. 322, 114 S. E. 773, 115 S. E. 527, and authorities cited, if a vendor, at the time he enters into a contract of sale of real estate, which undertakes to convey a marketable title thereto, in good faith believes that he has such a title, but, at the time fixed for the completion of the contract, finds himself unable, through no fault of his own, to convey such title, and for that reason makes no conveyance, it is settled that, where none of the purchase money has been paid, the vendor is liable in general damages to the vendee for nominal damages only for the breach of the contract to convey. But where the situation of the vendor is such that the doctrine mentioned does not apply, it is uniformly held that for breach by the vendor of his contract to convey the vendee is entitled to recover, as general damages, for the loss of his bargain, namely, the difference, if any, between the contract price of the property and its value at the time of the breach of the contract. And, as said in 27 R. C. L., sec. 588, p. 631: “The same rule in effect has been announced as regards contracts for the exchange of land; that is, the plaintiff is permitted to recover the difference between the value of the land which he was to convey and that which he was to receive, where neither party has conveyed * * *. This is very generally recognized where the vendor cannot be said to have acted in good faith, as where * * * * the vendor had knowledge- of his want of or defects in his title.”

In 2 Sutherland on Damages (4th ed.), see. 581, cited and quoted in Davis v. Beury, supra (134 Va. at pp. 343-4, 114 S. E. 773, 115 S. E. 527), and, so far as material, again quoted here, it is said that the aforesaid doctrine of Flureau v. Thornhill does not apply if the vendor, at the time of the contract, “ * * knew or should have known that he could not comply with his undertaking; * * * if his contract to sell requires the signature of his wife to bar an inchoate right of dower, or the consent of a third person to render his deed effective; * * *.”

In 27 R. C. L., sec. 389, pp. 632-3, this is said: “The rule permitting the purchaser to recover for the loss of his bargain has been applied where the vendor entered into the contract knowing that * * his title was defective * * . It has been held immaterial that the vendor may have in good faith believed that he would be able to * * convey a good title, as where a trustee agreed unconditionally to convey but was unable to do so because the beneficiary refused to give his consent, such consent being essential to the power to eonvey.” Citing among other eases, Pumpelly v. Phelps, 40 N. Y. 59, 100 Am. Dec. 463.

In New York the doctrine of Flureau v. Thornhill is in force, as in Virginia, and in the case last mentioned, the court said this: “Where * * the vendor contracts to sell and convey, in good faith, believing he has a good title, and afterwards discovers his title is defective, and for that reason, without any fraud on his part, refuses to fulfill his contract, he is only liable for nominal damages for a breach of his contract” (citing New York cases). “The rule is otherwise, however, where a party contracts to sell land which he knows at the time he has not the power to sell and convey: and if he violates his contract in the latter case, he should be held to make good to the vendee the loss of his bargain; and it does not excuse the vendor that he may have acted in good faith and believed, when he entered into the contract, that he would be able to procure a good title for his purchaser.” Citing a great number of authorities.

In the jurisdictions in which the doctrine of Flureau v. Thornhill prevails the distinction seems to be well established certainly by the great weight of authority, that, if the vendor at the time he enters into the contract knows that it will not be in his power to convey the title he contracts to convey, unless he obtains the consent or conveyance of a third person, which at the time of the contract the vendor has no enforceable right to compel, the case does not fall within such doctrine. In snch case, if the vendor makes an unconditional contract to convey a marketable title, he cannot escape liability for compensatory damages for failure to perform by showing that the lawful act of some third person prevented the performance of his contract. There are two eases which hold that, where the ability of the vendor to convey depends upon the contingency of the approval of the court of the sale of a portion of the interests in the land sold, and both vendor and purchaser knew this at the time of the contract of sale and there are other peculiar circumstances, only nominal damages can be recovered by the purchaser for the failure of the vendor to convey due to the refusal of the court to confirm the sale. See Eggert v. Pratt, 126 Iowa 727, 102 N. W. 786, Margraf v. Muir, 57 N. Y. 155. But the holding in these cases has no application to the case before us. Therefore, under the above cited authorities, and upon principle, we are of opinion that the instant case does not fall within the aforesaid doctrine of Flureau v. Thornhill, and that the measure of the general damages for which the defendant is liable to the plaintiff for the breach of the contract by the defendant is the exeess difference, if any, between the value of the defendant’s Oak street property and the value of the plaintiff’s Ashe street property, plus $3,000.00, at the time of the breach, which was also the time fixed for the completion of the contract by the defendant. If the respective properties had any market value at such time, the exeess difference in the market value of the former over the latter property, plus $3,000.00, if any, would be the proper measure of the general damages which the plaintiff would be entitled to recover. This question was not submitted to the jury but was taken from them by the instructions. There was some evidence before the jury, which, as a whole, tended strongly to show that at the time of the contract and also at the time of its breach by the defendant, both properties had a market value, and that the market value of the defendant’s Oak street property was only $6,500.00; and that the market value of the plaintiff’s Ashe street property was $3,500.00; so that there was no excess difference between the market value of the defendant’s and that of the plaintiff’s property, plus $3,000.00; but the testimony on that subject is obscure and is not developed with sufficient definiteness to enable the court to feel satisfied that we would attain the ends of justice if we were to enter judgment thereon under section 6365 of the Code, rather than to award a new trial.

There is evidence in the record of some small expenditures, such as $5.00 fee paid by the plaintiff for draft of deed from himself and wife to the defendant, $2.05 expense of moving a telephone and the expense of hauling “some packing cases” (the amount of the latter expense not stated), which the plaintiff is entitled to recover as special damages, due to the aforesaid breach of contract by the defendant. And if the plaintiff suffered any other special damages, because of the breach of the contract, he is also, of course, entitled to recover such damages. However, as is well settled, such special damages must be alleged in order to be recovered (27 R. C. L., sec. 394, p. 637), unless that requirement of pleading is in some way waived by the defendant.

. By the instruction in question the court decided that the contract entitled the plaintiff to recover $3,500.00, as “the stipulated price of the Ashe street property,” being the measure of damages which is applicable in certain actions by a vendor against a vendee for breach of contract of sale of real estate, consisting of the failure to comply with the promise in the contract to pay the purchase money, under the authority of Turner v. Hall, 126 Va. 247, 104 S. E. 861, and the authorities therein cited, among which are Bailey v. Clay, 4 Rand. (25 Va.) 546, and 2 Minor’s Inst. (4th ed.) 864.

As appears from an examination of the authorities just mentioned, the cases involved are all cases of actions of assumpsit by the vendor on the executory contract of sale, based on the promise therein of the vendee to pay to the vendor the purchase money. They are not actions to recover damages for the breach of the promise of the vendee to do something else than to pay money. And in each of these cases the obligation of the vendee, which is enforced, is his promise to pay, which is expressed in the contract, and the whole of his promise as expressed in the contract, not merely a part of it. These cases, in effect, enforce the promise to pay contained in the contract—i. e., they, in substance, enforce entire specific performance of the contract on the part of the defendant. But such an action as that in the instant case does not seek to and cannot enforce specific performance of the entire contract.

As said in the opinion delivered by Judge Kelly in Turner v. Hall, the doctrine of that decision on the subject under consideration is based on the position that “the vendor is entitled to maintain an action on an ex-ecutory contract of sale for the purchase money,, on the theory that the action is in the nature of a suit in equity for specific performance.” (Italics supplied.)

And when we attempt to apply the doctrino of the authorities just mentioned to the instant ease, it becomes at once apparent that it is inapplicable. Although we may regard Doriot as the vendor, and Greer as the vendee of the Ashe street property, still, if the doctrine just mentioned were applied, the only promise of Greer to which it would be applicable was Ms promise to convey to Doriot a marketable title to the Oak street property, and that was the promise which was broken by Greer. For the breach of that promise the measure of damages is as above stated. There was no promise of Greer to pay to Doriot any sum of purchase money in any event whatever. The promise of Greer was .to do a specific thing other than the payment of purchase money for the Ashe street property of Doriot, namely, to convey Greer’s Oak street property in exchange for the former property and for $3,000.00 in cash to be paid to him by Doriot. The breach of the contract by Greer, consisted, as is apparent, not in his refusal to pay the plaintiff, Doriot, $3,500.00, for he made no such promise, but solely in his failure to convey the Oak street property as he contracted to do. The plaintiff himself, in his testimony, admits that the defendant did not promise to pay the plaintiff any purchase money, as appears from the following excerpt from such testimony on cross examination:

“Q. Now, at the time you and Greer entered into the contract, did you have any idea of selling Greer your property for a money consideration—cash consideration?

“A. No. * * *”

Indeed, that the valuation of $3,500.00 was placed on the plaintiff’s Ashe street property does not .expressly appear from the contract, but only by inference. And it is manifest from the contract itself (and there is not a scintilla of evidence in the record to the contrary) that such valuation, as well as that of $6,500.00 of the defendant’s Oak street property, was merely the valuation at which the property was to be “traded” or exchanged. To wrest a valuation stated in the contract for that purpose, into a contract on the part of the defendant to buy the plaintiff’s property outright at such a valuation, would be to make a contract for him which he did not make.

It is apparent, therefore, that no action would lie against Greer for purchase money. Indeed, the action in the instant case was not in fact brought against Greer for any purchase money, but, as aforesaid, for his breach of contract to convey—to do something else than to pay money. Nor, in view of the terms of the contract, could this action at law have been brought otherwise than for damages for breach of the contract. It is not an action on a contract of sale for purchase money which the defendant vendee has agreed to pay, nor could such an action be properly brought on the contract in suit. Hence, the doctrine of Turner v. Hall, and like authorities on the subject, cannot have any application.

In truth, the doctrine just referred to, even as applicable to eases falling strictly within it, has been adopted only in a few jurisdictions. As said in Turner v. Hall, supra (128 Va. at p. 256, 104 S. E. at p. 864): “The great weight of authority * * * is to the effect that in an action at law the vendor can only recover, damages for the breach of an executory contract of sale, and if he desires to recover the purchase money as such, he must go into equity and sue for specific performance of the contract.” And in 27 R. C. L., sec. 366, pp. 612-613, this is said: “According to the weight of the authorities, if the contract is executory and the agreements to convey and to pay the purchase money are dependent, the vendor cannot maintain an action for the purchase money, after a tender of the conveyance, but can only recover at law damages for the breach of the contract.” This doctrine, however, having been so long established in Virginia, we have no intention to disturb it in cases to which it is applicable; but we are unwilling to extend the doctrine to other cases not falling strictly within it.

In the argument for the plaintiff, Henderson v. Lightfoot, 5 Call (9 Va.) 241; Minnick v. Williams, 77 Va. 758; and Max Meadows Land Co. v. Bridges, 95 Va. 184, 27 S. E. 839, are relied on to sustain the position that as the defendant would not pay for the Ashe street property of the plaintiff by conveying to him defendant’s Oak street property as provided in the contract, the law will compel the defendant to pay for the Ashe street property in money. An examination of these cases discloses that none of them is in point.

Henderson v. Lightfoot was not an action at law but a suit in equity for specific performance. Moreover the whole of the contract which remained unperformed was specifically enforced in that case, not merely a part of it.

Minnick v. Williams was an action of debt brought on an agreement in writing by which the defendant obligated himself to pay to the plaintiff $350.00 rent, at certain times, “either in goods at regular prices or in current money.” There was á demurrer to the declaration on the ground that the action was not on a contract to pay a sum certain but was an agreement to do something else in the alternative, on which an action of covenant, not debt, was the proper remedy. The court in the opinion said and held this: “The action of debt only lies for money. On an obligation to pay or deliver any other article, covenant is the proper remedy, and the recovery is of a compensation in damages; ‘goods at regular price’ cannot be considered as money. * * * But when the obligation is to pay a sum of money, or some other article, in the alternative, on or before a certain day, the obligor has his election to deliver the article on or before the day; but if he fail to do so, he is liable absolutely for the money, and to an action of debt for the money.” Had the contract in the instant case provided that the defendant would pay $3,500.00 for the Ashe street property of the plaintiff or convey defendant’s Oak street property for the Ashe street property and $3,000.00, the case would be in point. It is precisely for the lack of any promise of the defendant in the contract in the instant case to pay money to the plaintiff in the alternative, or otherwise, that the action for the money cannot lie.

Max Meadows Land Co. v. Bridges was a suit in equity to recover compensation for a deficiency in acreage in an exchange of lands, due to a mistake when the deeds of exchange were executed. The recovery allowed rests upon well settled principles of equity jurisdiction, which have no relation to the principles involved in the instant case. And then, too, the whole of the contract which remained unperformed was enforced, not merely a part of it.

The case will be reversed and a new trial awarded the defendant.

Reversed and new trial awarded.

Kelly, P., and West, J., dissenting.